Working Paper Series

ICE WP#2024-002

The Allocation of Talent and Financial Development, 1897 to 1936
⼈才配置与⾦融发展: 来⾃近代中国的实证(1897-1936)

February 19, 2024

by Chen Lin, Chicheng Ma, Yuchen Sun, and Yuchen Xu

R&R at Management Science


We examine how the supply of talent affected financial development based on an experiment that abruptly changed the allocation of talent in historical China. Under the meritocratic civil examination system, government service was the main employment for the Chinese intellectuals. The abolition of this system in 1905 reduced the status and wealth attached to government service, which led the intellectuals to turn to modern banking as a high-status sector of employment. We find that regions where there were more candidates for the civil examination produced more financial professionals after 1905, which translated to a greater development of modern banking.



Shopping Basket